Stanford China Economic Forum focuses on technology, innovation, policy

Artificial intelligence, education, financial technology, and U.S.-China relations were among the topics that nearly 500 scholars, business leaders, and Stanford alumni delved into during the Stanford China Economic Forum.

The daylong Forum, held last month in Beijing, was hosted by the China Program of the Stanford Center on Global Poverty and Development, the Stanford Institute for Economic Policy Research (SIEPR), and the Graduate School of Business. It featured keynotes by Eric Schmidt, the former executive chairman of Google and Alphabet; and Martin Lau, president of the Chinese internet giant Tencent.

The event provided the opportunity for exchange with Chinese scholars and thought leaders. Stanford operates a growing number of programs focused on China across its schools, institutes, and centers. It is also home to more than 1,000 undergraduate and graduate students from China.

“Given the critical economic and political positions that our countries occupy, it is crucial that we find mutually beneficial ways to work together.  Our success in creating a peaceful, habitable, and prosperous future depends on it,” Stanford President Marc Tessier-Lavigne said during the Forum’s welcoming session. Tessier-Lavigne participated as a part of a broader trip to Hong Kong, Shanghai and Beijing that featured visits with Stanford alumni, incoming Stanford students and leaders of Chinese universities.

“This requires us to continue nurturing a collaborative relationship based on understanding and shared interests,” Tessier-Lavigne said. “The dialogue and collaboration that we will foster today will help shape a future that reflects the best of what our two nations have to offer.”

Grant Miller, director of the Center on Global Poverty and Development, emphasized the importance of having the two countries work together.

“The U.S. and China play vital leadership roles in the global economy, accounting for roughly 40 percent of the world’s GDP and setting the pace of innovation and technological advancement,” Miller said.

James Liang, chairman and co-founder of Ctrip and president of the Stanford Alumni Club of Beijing, echoed Miller’s comments during the Forum’s welcoming session.

“We are here to promote mutual understanding, open dialogue, close cooperation, and healthy competition, between entrepreneurs and scholars between the two nations,” Liang said.

Following are highlights from some of the sessions during the Sept. 8 event. Videos from several of the sessions can be watched on SIEPR’s YouTube channel. More information on each session and speaker can be found at the Forum’s official website.

Challenges ahead in education

Education took center stage during the day’s first session, with speakers focusing on the rapidly changing landscape of how Chinese students are learning. In a wide-ranging panel, Cindy Mi, founder and CEO of VIPKID, and Yingyi Qian, former Dean of the School of Economics and Management at Tsinghua University, discussed all things education – from the influence of Western pedagogical methods to recent reforms of the gaokao, China’s national college entrance exam. The session was moderated by Richard Levin, President Emeritus of Yale University.

From early childhood to higher education, China’s education system is undergoing radical changes. Increasing access to learning resources is viewed as a crucial step towards economic and personal success, even as schools are filled to capacity.

With the repeal of the country’s One-Child Policy in 2015, more children are expected to enter the Chinese school system, which could put a strain on resources and drive student competition, Mi said.

“As we have more organization, I think that the concentration of those babies in cities makes education resources, especially high-quality ones, even more competitive,” she said.

Qian has also noticed a drastic increase of student enrollment in higher education. In 1998, 1 million students were enrolled in colleges and universities. Enrollment now stands at more than 7 million.

As a former English teacher with 50 students in her classroom, Mi knows first-hand the challenges of overcrowding.

To help ease the burden, she built an online education resource that allows children to engage with individuals outside of the classroom. Her creation, VIPKID, connects students across China with English teachers in North America to create an immersive digital classroom, where students are able to learn English and interact with a teacher in real time.

The rapid inclusion of technology in and outside the classroom, is rising substantially and able to address a host of issues China is currently encountering, such as overcrowding of schools, difficult access to rural areas, and equity in education.

Qian agreed with a common criticism that Chinese education does not promote the cultivation of independence, critical thinking, and creativity and that including more technology in the classroom may not help.

“The learning from memory is universal, but China is extreme,” said Qian. “In some ways, this way of learning is useful for certain types of jobs, but it creates a problem if you want to educate creative talents. Increasingly in China, in universities and colleges, it is well recognized that this is not good for innovation. So the main motivation for change comes from the desire, the strong desire, for innovation.”

China markets open up to foreign investment

China’s financial sector is developing rapidly amidst rising capital market turnover and growth in commercial banking. Many sophisticated financial products and services originally created in the West are being welcomed – with caution – into the Chinese markets.

Ning Jia, moderator of the session and associate professor of accounting at Tsinghua University, said China’s financial sector is experiencing rapid growth and enacting major initiatives in opening capital markets, hoping to entice foreign companies to list in China.

Xinghai Fang, vice-chairman of the China Securities Regulatory Commission, said the Chinese government has accumulated a significant amount in cash savings and that the main challenge for the government is strengthening the domestic financial sector to attract foreign business.

“One thing we are doing earnestly is to open up the financial sector to the rest of the world; to bring in higher quality financial service providers so they can help allocate that pile of savings more efficiently,” he said. “If they can do so, the Chinese economy can grow even faster and more efficiently.”

Fang is bullish on China’s position in the global economy, due to its rapidly expanding financial sector and its burgeoning entrepreneurship environment.

“If you look at China over the last 40 years, Chinese manufacturing has really transformed the landscape of the world economy, not just the Chinese economy,” he said. “Looking at the next 10, 20, 30 years, I believe the manufacturing sector will continue to play a very important role, but the financial sector has the potential to transform the world economy.”

Fang’s co-panelist, Neil Shen, global steward of Sequoia Capital and co-founder of Ctrip, shared a similar view on China’s financial status. But he also stressed the need for more domestic investment.

Shen has observed an increase in tech companies opening IPOs in Asian markets, but still, a majority of high-growth companies flock to U.S. markets for initial offerings.

“People should be listed here,” Shen said.

Shen continued to laud the healthy competition in Chinese markets as compared to the U.S. He said America’s “Big 5” tech companies are increasingly absorbing any competition and that entrepreneurs have a better chance of building a multi-billion dollar tech company in China.

Artificial intelligence: caution and optimism

The U.S. and China are world leaders in artificial intelligence research and development. In both countries, rapid advances in AI, combined with the explosive growth of “big data”, are radically transforming conventional methods in areas as diverse as healthcare delivery and retail management. But concerns about the role of AI continue to spur uneasiness.

“The question of ‘what intelligence is’ is as old as human civilization, but the very audacious quest to make machines think is only about 60 years old,” said Fei-Fei Li, director of Stanford Artificial Intelligence Laboratory. “And Stanford has been right there at the very beginning of the birth of artificial intelligence.”

Lei Zhang, chairman and CIO of Hillhouse Capital Management, explained his company’s investment in “AI Plus”, where parts of daily life will be enhanced, not replaced, by the implementation of AI in industries such as education and retail where there’s potential to be more accessible and personable.

Paul Oyer, moderator of the session and an economics professor at Stanford’s Graduate School of Business questioned whether AI can customize people’s education needs and respond to them more efficiently.

“We’ll see,” responded Zhang. “Sometimes we don’t know what we want. I think what this technology has done is open the door to something. That’s why I’m optimistic.”

At the same time though, AI is raising concerns about machine-learning bias, privacy, and potential for misapplication. Li said 2018 will be a defining year in AI. Pointing to recent fatalities caused by self-driving cars, Li suggested that policy makers, private corporations, software companies, and economists, will need to come together soon to define basic principles and ethics, as well as determine structural responsibility.

“What I worry the most is really the deep potential tribalism out of the AI development,” said Zhang. “That the world is developing into the have’s and have not’s.”

Mixed views on trade

On the very day of the Forum, President Trump threatened an additional $267 billion of tariffs on Chinese goods, totaling more than $500 billion. On hand to discuss trade were two leading scholars on Chinese economic policy who portrayed a mixed message of cautious optimism and an underlying feeling the U.S. and China are entering an unexplored part of their relationship.

“What we want to do during this session is to ask the question of how did we get to this point and what is likely to happen,” said Jean Oi, moderator and director of the Stanford Center at Peking University.

Over the past 40 years, U.S.-China relations have been marked by cooperation and competition. The two nations are now in the throes of a burgeoning dispute over trade. But the conflicting themes of collaboration and rivalry have many dimensions.

Lawrence Lau, an economics professor at the Chinese University of Hong Kong and professor of economic development, emeritus, at Stanford, explored how the tension between interdependence and antagonism is currently playing out, as well as a history of relations between the countries.

He said there has always been competition between the two countries, but that it has potentially been more positive than negative. The countries have played off one another and that’s spurred technological research and innovation.

Susan Shirk discussed the contest for superiority in the arena of technology, directly speaking to China’s expansive industrial policy.

Shirk, the chair of the 21st Century China Center at the University of California San Diego, explained that Chinese high-tech industrial policy is unusual; massive investments by the Chinese government have been made in private and state-owned, domestic and foreign, companies involved in developing artificial intelligence, robotics, and quantum computing.

“This is really increasingly viewed as a threat to national security and economic competitiveness of other advanced industrial countries.”

Both Lau and Shirk addressed the economic issues that divide the two nations during the panel portion, which covered a wide range of topics including the U.S.-China trade deficit in goods and services, as well as disputes over intellectual property and security.

Lau ended the session on an optimistic note grounded in caution.

“This rivalry, we hope it is a friendly rivalry, was probably inevitable,” he said. “But things could be better if it were more open.”

Please note that prior to May 2019, the Stanford King Center on Global Development was known as the Stanford Center on Global Poverty and Development.